Evaluation of purchasing process

EVALUATION OF PURCHASING PROCESS AT MRF LTD.
EXECUTIVE SUMMARY
In today’s world of intense competition and rapid dynamism, all the
companies worldwide are tuning their focuses on the customer. Suddenly, the
customer had succeeded in capturing all the attention of the companies towards him,
so much so, that the once famous maxim, “customer is the god” has become so true
and relevant today.
There has been a “paradigm shift” in the thinking of these companies and
none other then the customer has brought this about.
Earlier there was a sellers market, since goods and services were in short
supply and the sellers use to call the shots. But, ever since the advent of the era of
globalization, there has been total transformation in the way the customers being
perceived. Today, marketers are directing their efforts in retaining the customers and
customers’ base. Their focus has shifted towards integrating the three elements
people, service and marketing.
The customer’s importance has assumed imponderable proportions in
today’s world, because of the inherent value that the customers command can “make
or break” a company. It is the responsibility of every company to see that all its
customers are equally satisfied with them, for one single dissatisfied customer will
tell atleast nine others about the dissatisfaction and will spark off a chain reaction
and spell doom for that company. In such scenario, retention of the existing
customers assumes diabolical proportion. Research has thrown light on some
important aspects of customer’s retention it has been proved empirically that
acquiring new customers can cost five times more than the cost involved in
satisfying the customers.
T. JOHN INSTITUTE OF MANAGEMENT AND SCIENCE, BANGALORE Page 1

INTRODUCTION
Far-reaching changes have been taking place in the Indian economy during
the recent Past, consequent to the opening up of our economy through globalization
and liberalization policies. The flood gates have been thrown open to allow
international competition for manufactured goods as well as services, marketing it a
question of survival of the fittest in any industry.
In the Present highly competitive economy which can be called a buyer’s
market, it is the customer who wields full power. He can make or wreck a company.
No wonder that the collective battle cry from sales and marketing people, retailers,
who leasers and advertising wizards alike is now ‘Serve the customer’, or ‘Delight
the customer’. The customer who was considered the ‘King’ is now treated almost
like ‘God’, emulating the highly successful marketing people of Japan. When
consumer expectations become higher and higher, superior market driven strategies
or customer driven strategies and their execution in the market are important.
Companies have to be fully customer oriented to succeed in the present
competitive scenario and, should think customer ‘live for customer’, ‘Smell
Customer’, and ‘build customer relations’.

ROLE AND SCOPE OF PURCHASING
Every manufacturing process requires materials, supplies and services.
Before men or machines can start turning out products, the materials must be on hand,
and there must be assurance of a continuing supply to meet production needs and
schedules. The quality of materials must be adequate for the intended purpose and
suitable for the process and the equipment used. If the material fails on any of these
points, the results can be costly; expensive delays, inefficient production, inferior
products, broken delivery promises and unhappy customers.
If a company wants to stay competitive and earn satisfactory profits, it must
procure materials at the lowest cost consistent with quality and service requirements. At
the same time, it must keep the administrative cost of buying and the cost of material
inventories at an economic level.
In some manufacturing industries, despite rising wages, the ratio of
purchased materials cost to total product cost is generally rising. This fact is due to in
part to increasing mechanization. It is also due, in great measure to the growing trend
towards specialization in manufacturing.
PURCHASING’S PART IN THE TOTAL SYSTEM
Purchasing is not an end in itself. Materials and supplies are bought because
they are needed. Because the activities of purchasing have the primary purpose of
implementing the work of other departments by procuring these goods, it is sometimes
regarded as merely a service function. Purchasing can be carried on under this concept
with partial effectiveness. The implication, however, is that purchasing considerations
and subordinated to the aims, desires and policies—or even to the preferences and
whims—of the departments served.

RESPONSIBILITY FOR PURCHASING
Purchasing responsibility, as with other major management and operating functions,
is generally delegated to a specific person or a special department in the company
organization. In few concerns of any substantial size today do individual departments do
their own buying, of either production materials or operating supplies. In some cases,
the specialized purchasing department comes under the jurisdiction of the production
manager. Most companies set up purchasing, or materials, management as a completely
separate department, with the chief purchasing officer reporting directly to the executive
who has the overall responsibility for profitable operation, that is, the president,
executive vice president, general manager, or plant or divisional manager.
DEFINITION
Management control point where all significant purchases are monitored for the right
authorization of the right item, at the right price, quality, and quantity, from the right
supplier at the right terms, and at the right time.
Its major objectives are to
(1) Maintain the quality and value the firm's products,
(2) Minimize cash tied-up in inventory,
(3) Maintain the flow of inputs to maintain the flow of outputs, and
(4) Strengthen the firm's competitive position.
Purchasing may also involve
(a) Development and review of the product specifications,
(b) Receipt and processing of requisitions,
(e) Award of supply contracts,
(f) Inspection of good received, and
(g) Their appropriate storage and release.

MEANING
Purchasing managers/directors, and procurement managers/directors guide the
organization’s acquisition procedures and standards. Most organizations use a three-
way check as the foundation of their purchasing programs. This involves three
departments in the organization completing separate parts of the acquisition process.
The three departments do not all report to the same senior manager to prevent
unethical practices and lend credibility to the process. These departments can be
purchasing, receiving; and accounts payable or engineering, purchasing and
accounts payable; or a plant manager, purchasing and accounts payable.
Combinations can vary significantly, but a purchasing department and accounts
payable are usually two of the three departments involved.
When the receiving department is not involved, it's typically called a two-way check
or two-way purchase order. In this situation, the purchasing department issues the
purchase order receipt not required. When an invoice arrives against the order, the
accounts payable department will then go directly to the requestor of the purchase
order to verify that the goods or services were received. This is typically what is
done for goods and services that will bypass the receiving department. A few
examples are software delivered electronically, NRE work (non reoccurring
engineering services), consulting hours, etc...
Historically, the purchasing department issued Purchase Orders for supplies,
services, equipment, and raw materials. Then, in an effort to decrease the
administrative costs associated with the repetitive ordering of basic consumable
items, "Blanket" or "Master" Agreements were put into place. These types of
agreements typically have a longer duration and increased scope to maximize the
Quantities of Scale concept. When additional supplies are required, a simple release
would be issued to the supplier to provide the goods or services.

RESEARCH METHODOLOGY
1. The research was conducted through personal interaction.
2. The primary data was collected through personal interview and the
secondary data was collected through the website of the company and
journals.
SAMPLING DESIGN:
100% coverage was difficult within limited period of time. Hence, personal
discussion and telephonic discussion method was adopted for the purpose of the
study.
DATA COLLECTION
Most of the data was collected through discussion, working on the floor with the
staff and gaining inputs from them.
TYPES OF DATA
Primary Data: Questionnaire and personal interviews to higher level managers.
Secondary Data: Company Website, In-house Magazine, Company Journals and
Reports.
DESIGN OF THE STUDY
RESEARCH PROBLEM
The topic for the study was “Evaluation of Purchasing Process” at Madras Rubber
Factory Limited, Medak - Hyderabad
PURPOSE OF RESEARCH
The Project helps the Company to evaluate the purchasing process in depth and
understand the purchasing responsibility as with other major management operating

functions. The study also provides a platform to study and evaluate the suppliers of
MRF Ltd. In accordance with the purchasing cycle.

SCOPE OF THE STUDY
1. Useful for academic purpose and further reference.
2. Provides information about the functioning of the tyre industry in India.
3. The project helps to put into practice the theoretical aspects of the study
into reality.
4. It will also serve as a foundation upon which further can be planned.
OBJECTIVES
1. To study in detail the functioning and working of the Purchase
Department at MRF Ltd.
2. To review the existing purchasing cycle at MRF.
3. To study the supplier management at MRF in detail.
4. To evaluate the suppliers management with respect to suppliers
evaluation.
5. To provide valuable inputs to the organization with reference to the
analysis made.
LIMITATIONS
1. Due to the time constraint, the Managers could not give more
information at times.
2. Level of accuracy of the results of research is restricted to accuracy
level which the Staff has given their inputs.
3. Market forces can bring changes which are unavoidable.
4. Limited number of employees who were selected for the survey of this
study.
5. Some core data could not be collected due to confidentiality policies of
the company.

COMPANY PROFILE
Madras Rubber Factory Limited
Type Public
Founded 1949(chennai)
Founder(s) K M Mammen Pillai
Headquarters Chennai, India
Area served India
Industry
Car tyres, Motorcycle
Tyres, Bus/Truck tyres
Financials
Total Income - Rs. 56982 Million ( year ending Sep 2009)
Net Profit - Rs. 2563.2 Million ( year ending Sep 2009)
Website www.mrftyres.com
Key Persons
Chairperson – K M Mammen
MD - Arun Mammen

ABOUT MRF LTD.
MRF (Madras Rubber Factory) is India’s No.1 tyre manufacturing company. It was
started in the year 1946 by K M Mammen Mappillai as a small toy ballon unit.
Much later in November 1960 it ventured in manufacturing of tyres. The company
entered a technical collaboration woth Tire & Rubber company, USA.
In 1964 it established an overseas office at Beirut, Lebanon to tap the export
market. This was amongst India’s very first efforts on tyre exports.
In 1989 the company collaborated with Hasbro International USA, the world’s
largest toy maker and launched Funskool India. In the same year it entered into a
pact with Vapocure of Australia to manufacture polyurethane paint formulations and
with Pirelli for MUSCLEFLEX conveyor and elevator belting.
Currently MRF exports tyres to over 65 countries including America, Europe,
Middle East, Japan, and Pacific region. It presently has overseas offices in Dubai,
Vietnam and Australia.
PRODUCTS
Tyres- It manufactures various tyres for passenger cars, two-wheelers, trucks, buses,
tractors, light commercial vehicles and off the road tyres.
Conveyor belts- It manufactures conveyor belts with wide range of grades. It has a
range of applications in industries like mining, ports, thermal power plants, cement
plants, fertiliser, steel, etc. It exports the products to 15 countries.
MRF Tyres & Services is one stop shop providing range tyres. Currently it operates
90 franchisees across the country

SWOT ANALYSIS
Strengths
KEY EXECUTIVES
S.No Name Designation
1.
K M Mammen Chairman
2. K M Mammen Managing Director
3. Arun Mammen Managing Director
4. Ravi Mannath Company Secretary
5. K C Mammen Director
6. Ashok Jacob Director
7. Salim Joseph Thomas Director
8. K M Philip Whole Time Director

1. Established brand names (key in the replacement market)
2. Extensive distribution networks - For example, Apollo Tyres has more than
118 district offices, 12 distribution centre and 4,250 dealers.
3. Good R&D initiatives by top players.
Weaknesses
1. Cost Pressures - The profitability of the industry has high correlation with
the prices of key raw materials such as rubber and crude oil, as they account
for more than 70% of the total costs.
2. Pricing Pressures – The huge raw material costs have resulted in pressure on
the realizations and hence, the players have been vouching to increase the
prices.
3. Highly capital intensive - It requires about Rs 4 billion to set up a radial tyre
plant with a capacity of 1.5 million tyres and around Rs 1.5-2 billion, for a
cross-ply tyre plant of a 1.5 million tyre-manufacturing capacity.
Opportunities
1. Growing Economy leads to Growing Automobile Industry leads to
Increasing OEM demand that in turn leads to Subsequent rise in replacement
demand
2. Creation of road infrastructure has given, and would increasingly give, a
tremendous fillip to road transportation, in the coming years. The Tyre
industry would play an important role in this changing road transportation
dynamics.
Threats
1. Continuous increase in prices of natural rubber, which accounts for nearly
one third of total raw material costs.
2. Cheaper imports of Tyres, especially from China, selling at very low prices,
have been posing a challenge.

INDUSTRY PROFILE
Established in 1946 as a small toy balloon manufacturing unit in a shed at
Tiruvottiyur, Madras (now Chennai), MRF ventured into the manufacture of tread
rubber in the year 1952. The quality of the product was so high that by close 1956
MRF had become the market leader with 50%share of the tread-rubber market in
India. In 1961, MRF entered into tyre manufacturing in collaboration with the
Mansfield Tire & Rubber Company of USA. Since then MRF has come along way
towards achieving greater heights in the automotive tyre industry, with
6manufacturing units in India. It has a huge distribution network of 2,500 outlets
within India and exports to over 65 countries worldwide.
MRF is the leading manufacturer of tyres for almost all segments. Being
driven by technology and product innovation, every tyre that comes out is of the
highest standards and tested to weather the toughest conditions on any road. With
more than 85 tyre variants, MRF holds the highest market share of 22% in terms of
sales volume in the tyre industry.
The level of economic activity, performance of domestic automotive
industry, and the fairing of the transport sector directly influence the performance of
the tyre industry in India. The tyre industry is linked to performance of the original
equipment manufacturer in the automotive industry & also the replacement segment.
With the replacement segment dominating the overall tyre demand in India, the
industry remains inherently vulnerable to economic cycles. While adoption of
radials as become the norm in the car segment, in the bus and truck tyre segment, its
acceptance is still limited. Bus and truck radialisation could emerge in the long term
as the quality of roads improves and the restrictions on overloading are better
enforced.

OVERVIEW OF THE INDIAN TYRE INDUSTRY
The Rs.20,000 crore Indian Tyre Industry, is highly raw material intensive and
predominantly a Cross Ply (or Bias) tyre manufacturing industry. It is highly
concentrated wherein 10 large manufacturers account for over 95% of the total
tonnage production of 11.35 lakh M.T. It produces all categories of tyres, except
Snow Tyres and Aero Tyre for which there is no demand domestically.
The origin of the Indian Tyre Industry dates back to 1926 when Dunlop Rubber
Limited set up the first tyre company in West Bengal. MRF followed suit in 1946.
Since then, the Indian tyre industry has grown rapidly.
Transportation industry and tyre industry go hand in hand as the two are
interdependent. Transportation industry has experienced 10% growth rate year after
year with an absolute level of 870 billion ton freight. With an extensive road
network of 3.2 million km, road accounts for over 85% of all freight movement in
India.
Tyre majors have hiked prices. Moreover, due to shortfall in domestic supply and
increasing gap between domestic and international prices of rubber, the tyre
manufacturers have increased the import of natural rubber. According to estimates
by Automotive Tyre Manufacturers Association (ATMA), tyre producers are likely
to import 50% of their total natural rubber consumption due to tight domestic
supply. With profitability of tyre companies having a strong correlation to raw
material prices and as these companies operate on thin margins, this would remain
an area of concern.

Tyres by Type
Indian tyre industry produces the complete range of tyres required by the Indian
automotive industry, except for aero tyres and some specialized tyres. Domestic
manufacturers produce tyres for trucks, buses, passenger cars, jeeps, light trucks,
tractors (front, rear and trailer), animal drawn vehicles, scooters, motorcycles,
mopeds, bicycles and off-the-road vehicles and special defence vehicles.
1. Truck and Bus Tyres
The truck and bus tyre segment accounted for 19% of tyres produced in India in
FY2003. Every truck/bus manufactured generates a demand for seven tyres (six
regular and one spare) as against three in the case of two-wheelers and five for
passenger cars. In addition, the price of a truck tyre is significantly higher than that
of a passenger car tyre (roughly 10 times) or a motorcycle tyre. Thus the demand
multiple emanating from the commercial vehicle segment is highest in value terms.
2. Passenger Car Tyres
The passenger car tyre segment accounted for 17% of all tyres produced in India in
FY2003. With passenger car production witnessing a growth of 12% in FY2003
over the previous year, OEM demand accounted for about 33% of the total sales that
year. The replacement market accounted for around 63% of the total sales of
passenger car tyres in FY2003. Exports accounted for 4% of the total passenger car
tyre demand in FY2003. With the stock of cars increasing, replacement demand is
likely to continue.
3. Motorcycle Tyres
Motorcycles accounted for 76% of two-wheelers sold in the domestic market in
FY2003. Motorcycle tyres constitute the largest segment of the domestic tyre
industry (29% of total tyre demand in FY2003). The replacement market accounted
for around 49.8% of the total motorcycle tyres sold in FY 2003, while OEM demand
accounted for around 50%.

MAJOR PLAYERS AND MARKET SHARES
Major players include MRF Ltd. Which is the market leader (22% market Share)
followed closely by Apollo tyres limited (21% market share). The other players are J
K Tyres and Industries Ltd. (18%), Ceat Ltd. (13%), Birla Tyres (10%), Good year
(7%) and Bridgestone (5%).

PRODUCT PROFILE
RADIAL TYRES
Wanderer ZGT ZCC
ZVT ZVTS ZGP
BIAS PLY TYRE PATTERNS
LEGEND SM – 12 SW - 99

ESTATE BIGROVER TWINTREAD

MOTOR BIKES-FRONT
RIB/RIB PLUS ZAPPER FS ZAPPER FM
MOTOR BIKES-REAR
ZAPPER VYDE MOTO-D ZAPPER-Q

SCOOTER-FRONT
NYLOGRIP SCOOTER NYLOGRIP PLUS FE ZAPPER FG
SCOOTER-REAR
NYLOGRIP 001 NYLOGRIP SCOOTER ZAPPER-D
(SCOOTER)

OTHERS
MUSCLEROK MUSCLEROK MUSCLEROK
EARTHMOVERS SMOOTH GRADERS
TRUCKS/BUSES
SUPERLUG-50 M-77 MUSCLEROK-X

STEEL MUSCLE S1R4 STEEL MUSCLE S1L6

AWARDS & ACHIEVEMENTS
NSMRF voted the "Most
Trusted"
Tyre company in India by
TNS 2006 global CSR study.
J D POWER ASIA
PACIFICMRF won the award
for customer
satifaction not once but 6
times
in the last 7 years.
CAPEXILMRF won the
award for exports.

THE MRF DESIGN PROCESS
The Design process at MRF starts from the customer - inputs from individual
customers are compiled by marketing and given to Corporate Technical MRF's
R&D and Product Development Division or vehicle specific requirements are
received from the OE customer.
MRF's team of 300 engineers and scientists gives MRF its enormous strength in
product design. Requirements received, a team now works on converting the
customer input into a Design Concept.
MRF uses cutting - edge technologies in predictive testing and design validation
before it leaves the drawing board. These advances have significantly brought down
the time to market for new designs.
Advanced raw materials are tested and approved in our NABL accredited
laboratories. MRF works closely with global suppliers in using the latest
developments in materials across the globe. Our laboratories which have the very
latest in testing equipment closely monitor the quality of the material going into our
tyres at the time of approval and regularly after that.
Tyres are now handed over to the Vehicle Dynamics Group, who now validates the
design on the vehicle. These tests are done at the test track in a series of manoeuvres
at various speeds, pushing the tyres to the limits of its capabilities.
MRF also tests tyres on fleets across the country to ensure that the tyres have
endured successfully all the types of roads on which our customers travel daily.
Race Tracks and Indian Roads are our laboratories.
Only after this do we give any tyres to the customer - all global players
manufacturing a global class of vehicles. MRF has been designing tyres this class of
vehicles for more than a decade now. MRF tyres have met the demanding
requirements of these vehicles, backed by an R&D team which is completely in-
house and self reliant.

GENERAL PRACTICES AT MRF
• ORGANIZATION CULTURE
MRF exhibits a very free and friendly environment where both friendship and
performance is valued and appreciated. The employees have a strong feeling of
belongingness as well there exists a ruthless focus on goal achievement. The
employees are focused and have a clear vision of the Company’s future.
• ORGANIZATIONAL STRUCTURE
At MRF, the jobs are formally divided, grouped and coordinated as per the skills
and capabilities of the individuals. The organization exhibits a decentralized pattern
wherein decisions are at the lower level personnel who are directly dealing with the
job or activity. The organizational structure is a mixture of mechanistic model and
organic model.
The structure is characterized by extensive departmentalization, low level of
formalization, possesses a comprehensive information network and relies on
participative decision-making.
• COMMUNICATION NETWORK
Each statement of MRF exhibits SAP which helps Departmental heads to
communicate with each other. It is the most quick and convenience way to share
important information. It also helps to file day to day report to the divisional head.
• SPAN OF CONTROL
Span of control is the number of employees a Manager can effectively and
efficiently manage. MRF exhibits a narrow or small span of control. Hence,
employees of MRF are effectively managed by the Manager and they also get
enough time to provide the necessary leadership and support.
• BENCH MARKING
At MRF, benchmarking is an important task, which is carried out in every
department, where the company searches for the best practices amongst its
competitors and non-competitors that lead to their superior performance and
continuous improvements are done.

DEPARTMENTAL STUDY
HUMAN RESOURCE DEPARTMENT
INTRODUCTION
Human Resource Department is concerned with the people working in the
organization. This department handles activities like recruitment, identifies and
evaluated training needs of individuals, payroll.
Matters relating to labor welfare and labor disputes are also handled.
OBJECTIVE
• To bring in organization culture, this encourages and rewards exceptional
performance.
• Fosters team work and supports balance attitude to work and personal life.
FLOW OF AUTHORITY
Sr. Manager Personnel and
Administration
Security Guards (17)
Head Security
Security OfficerPersonnel and Admin Executive
(2)

FUNCTIONS
RECRUITMENT
Recruitment of Executives and Managers is done at the corporate office in Chennai.
Recruitment of staff and casual employees is done at the unit level.
In MRF, any new employee is appointed for a probation period of six months. After
this period based on the Performance Appraisal administered, he/she may be
confirmed in the company.
MRF believes that once an appropriate candidate is selected, half the job is done.
Sources of Recruitment
• Advertisement
• Data Bank
• References
TRAINING
• Training is provided through educational or training activities.
• The educational, training and experience requirements for positions which
perform activities affecting quality are identified.
• Appropriate training is provided either in-house or externally.
• Employee training records are established and maintained.
• The effectiveness of training is evaluated and employee training records are
reviewed to determine future training requirements.

Compensation and other Pay Roll practices
Payrolls-
This is the function which enables payment to the employees. An employee payroll
will contain elements as follows:
Payment Deduction Benefits
Basic Provident Fund(PF) Reimbursement Medical
Expenses (RME)
House Rent Allowance Employees State
Insurance(ESI)
Conveyance Allowance
Dearness Allowance Income Tax Deduction Lunch Allowance
Attendance Bonus Any Loans taken
Entertainment Allowance LIC Premium
PEP(Performance
evaluation Payment)
Labor Welfare Fund (LWF)
PIP(Profit Incentive
Payment)
Payrolls are initially managed by the HR department (Preparation of salary data pay
slips) and then handed over to the Finance department for payments. Final payment
is given to the employees through Bank.
Madras Rubber Factory Ltd. employs both Permanent and casual workers. MRF has
stopped recruiting permanent workers. They mostly hire causal workers as per the
requirements. This has helped them in cost cutting.

FINANCE DEPARTMENT
INTRODUTION
This department takes care of all the financial and commercial aspects of the
company. Allocation of funds and proper utilization of funds is the main objective
of this department. All major records and documentation is done by this Department
at MRF Ltd.
OBJECTIVE
• Manage cash and funds in an effective and efficient manner
• Helps to know the financial status of the company.
• Payment of Salary to the employees and other expenses of the company.
FUNCTIONS
• Funds availability and Management
PAYMENTS (Accounts Payable) SALES (Accounts Receivables)
RAW MATERIAL (Inventory) MANUFACTURING (Finished Goods)
• Preparation and Monitoring Business Plan and Forecasts
In MRF, the financial year begins in March and ends in April. Every year the
company evaluates the business plan for the year and prepares new business
plan for the next year.
• Finalization and Audit of Accounts
At the end of the year the Finance Department prepares the Balance Sheet
and the Profit and Loss Account. It is then submitted to the corporate Head
Office at Chennai.

• Statutory Payments
The various statutory payments like PF, ESI, Service tax, Label Registration
fee, renewal licenses etc are paid by the department.
• Payment of Salary
The salary voucher is passed by the Accounts Department and is sent to the
Bank. For casual labors the payment is done in hand.
• Monthly MIS Reports and audits are prepared and sent to the Head Office.
FLOW OF AUTHORITY
Manager (Accounts)
Junior Officer (Cashier) Junior Officer
(Commercial)

MAINTENANCE DEPARTMENT
INTRODUCTION
Maintenance department includes the Electrical and Mechanical tem of MRF. The
maintenance department has to see to the proper functioning of machinery at the
various plants of the brewery.
OBJECTIVES
• To achieve low down time
• To reduce the cost of maintenance
• To save electricity, gas and furnace oil.
• To reduce the loss of utilities.
• To maintain a continuous production process.
FLOW OF AUTHORITY
Plant Engineer
Maintenance Engineer
(Mechanical)
Maintenance Engineer
(Electrical)
Electricians (3)
Welders (2) Fitters (2)

FUNCTIONS
1) Preventive Maintenance- Is done on a weekly, monthly and annual
basis. This is done so as to prevent any sort of breakdown.
2) Predictive Maintenance- Is done when any fault is predicted to occur.
3) Breakdown Maintenance- Is done when there is a breakdown of any
machinery.
TYPES OF MAINTENANCE
1. Preventive Maintenance: “Prevention is better than cure” same thing is
applied here at MRF. Basically this maintenance is to prevent machines from
getting damaged in future. Servicing of machines is done irrespective
whether machine is working or not. Then complaints from workers are
entertained. A check list is prepared of different machines so as to which
machine is to service at what periods i.e. on weekly basis, monthly basis, or
yearly basis.
2. Predictive Maintenance: It is a prediction about the requirement of servicing
for any machinery at particular stage or period. This maintenance is based on
past records and experience. This is done to reduce uncertain breakdown of
machinery.
3. Breakdown Maintenance: This maintenance is performed when machinery
breaks down. Here either machinery is repaired or replaced with other.
Preventive maintenance is directly related to breakdown maintenance. More
preventive maintenance means less Breakdown of machinery.

QUALITY ASSURANCE DEPARTMENT
INTRODUCTION
The Quality Assurance (QA) department inspects the quality of raw materials,
intermediate products, packaging materials and finished products. The laboratory
has standard testing techniques and instruments to perform various tests.
OBJECTIVES
• To control and assure the quality of raw materials till the final product is
produced.
• To carry out 100% inspection of components and finished products.
FLOW OF AUTHORITY
FUNCTIONS
• Incoming raw materials inspection
• Final Inspection Dispatch
• Documentation
• Customer Feedback and Research.
Manager (Quality
Assurance)
Shift BrewerMicrobiologists
(2)

SUPPLY CHAIN DEPARTMENT
PURCHASE DEPARTMENT
OBJECTIVE
The main objective of the Purchase Department is the procurement of raw materials
in the least possible lead time and minimum cost.
FLOW OF AUTHORITY
FUNCTIONS
• Once it receives the bill of material (B.O.M), it checks with the stores and
the non available materials are ordered.
• Follow up with the vendors for the status of delivery of raw material.
• Negotiate deals and prices of the purchases with the local vendor.
• Communicate the rejection information to the vendor with proper DMR
(Defected Material Report)
• Communicate the change in specification to the vendor.
• Conduct vendor on site audit.
Stores and Purchase Manager
Stores and Purchase
Executive
Stores Assistant

STORES DEPARTMENT
OBJECTIVE
• Supply material on the production floor on time.
• Reduce the inventory cost
• Proper flow of materials so that the production process is not hampered.
FUNCTIONS
• Receives the material in the inspection area.
• Checks the consignment whether it is in good or bad condition and also the
quantity ordered is verified.
• Records the number or units handled and moved.
• Sorts and stores items according to specification and does the physical
management of goods.
• Daily/Weekly inventory updates. Physical inventory check at the end of the
financial year is undertaken by this department.
• Issues material on the production floor according to the requirement
• Comparative statements of rates are done whenever quotations are received
from two or more vendors.
DISPATCH
OBJECTIVE
• Ensures delivery of finished goods.
• Dispatch and transportation of finished goods.
FUNCTIONS
• Communication the mode of transportation to the distributor.
• Arranging transportation and dispatching of finished goods as per packaging
slip and invoice.
• Payment confirmation

PURCHASING PROCESS AT MRF LTD.
Operating a purchasing department at MRF to meet these responsibilities involves a
variety of detailed assignments, of both an administrative and a routine nature.
Typical activities of even the simplest purchasing program include:
1. Basic Information
• Maintaining purchase records
• Maintain price records
• Maintaining stock and consumption records
• Maintaining vendor records
• Maintaining specification files
• Maintain catalog files
2. Research
• Conducting market studies
• Conducting material studies
• Conducting cost analysis
• Investigating supply sources
• Developing supply sources
• Developing alternate materials and sources
3. Procurement
• Checking requisitions
• Securing quotations
• Analyzing quotations
• Choosing between contract or open-market purchase
• Scheduling purchases and deliveries
• Negotiating contracts

• Issuing purchase orders
• Checking legal conditions of contract
• Following up for delivery
4. Materials Management
• Maintaining minimum stocks
• Improving inventory balance
• Improving inventory turnover
• Transferring materials
• Consolidating requirements
• Avoiding excess stocks and obsolescence
• Standardizing packaging
• Making periodic reports of commitments
DOCUMENTS MAINTAINED IN PURCHASE DEPT.
1 a. Advance Files:-
The file which maintains a record of the advance asked for
accounts. The supplier asks some advance for their product before delivery, with
purchase order. The percentage depends on the supplier’s interest.
1. b. Advance Executed:-
The file which maintains a record of the payment sent to the
vendor. The payments done for the supplier as advance for the product with the
purchase order before proforma of invoice.
1. c. Advance Recovered:-
The file which maintains a record of the items received & the
accounts settled.
2. Civil Major Expansion Jobs:-

The file which maintains a record of the civil expansion jobs
within the company environment.
Example- Supply of Chimney
Blow down pipe Trench 55 RMT
Office mezzanine floor shipping expansion.

3. Civil order major jobs:-
The file which maintains a record of the civil orders of the
jobs. The purchase order will be sent to the vendor for the particular civil job.
4. Executed high value purchase order:-
The file that records the executed purchase order of high
valued items.
Example- Boiler Chimney
HV-84 mill bearing- housing assly
DG KT 3067 Cummins engine.
5. a. Executed orders with file note:- (Intimation)
The file that records the executed purchase order with a file
note or a intimation. The intimation is given to the company that some details
are either missing or they are wrong and hence giving an intimation to change
them.
5. b. Executed orders with file note:- (Violation)
The files that records the executed purchase order with a file
note i.e. violation note. The purchase order is cancelled due to some reasons by
the company.
6. a. Purchase order of raw materials:-
The file that records the purchase order copies of raw materials
which are used for the production of tyres.
Example- Tyre bead wire
High speed diesel
Mineral turpentine.
b. Purchase order of spare parts:-
The file that records the copies of purchase order of spare parts
required for the production purpose.
Example- Floor cleaning liquid

Water pump to inlet manifold hose-P4.
Electronic ballast- opal- ES40S
c. Purchase order of repairs:-
The file that records the copies of purchase order of the repairing done
for the existing machines and equipments of the company.
Example- Repairing of Banbury body lub.
Repairing of B. bearing.
d. Purchase orders:-
The file that records the copies of the purchase order of every material
that is been purchased.
e. Purchase order- Service:-
The file that records the copies of the purchase order of the service taken
by other companies.
Example- Annual maintenance contract for thickness indication system on
calendaring machine.
7. Vendor detail forms:-
These files contains the details about the vendors of the business. It has
a chronological set of vendors from A to Z.

THE PURCHASE CYCLE
Identification
of need
Selecting suppliers, issuing
requests for quotations,
receiving and analyzing
quotations, and selecting
the right supplier.
Receiving
and
analyzing
purchase
requisitions.
Determinin
g the right
price.
Issuing
Purchase
Orders.
Following
up to assure
delivery
dates are
met.
Receiving
and
accepting
goods.
Approving
supplier's
invoice for
payment.

1. BASIC FORMS AND PROCEDURES
A using department indicates its need for material on a requisition. MRF uses a
stores requisition to obtain materials that are in regular use in the plant and that are
carried as normal stock. This goes directly to the stores department and the
requirements are supplied from there. A purchase requisition is used for materials
that have to be ordered from suppliers. The person who needs the material fills in
either type of form with the material name or code identification, the amount
needed, and the desired delivery date. Before sending the requisition to either stores
or purchasing, the person making the requisition must have it signed by a supervisor
authorized to approve the expenditure.
Sometimes purchasing is based directly on a bill of materials, which lists every item
in a company’s end product. When a manufacturing schedule is set by production
planning, purchasing is notified and can set up its purchasing schedule or program to
correspond with production plans. It receives a copy of bill of materials, on which
are indicated those items that are not on hand or ordered. This tabulation serves the
same purpose as a whole series of requisitions.
2. ORDERING
The various processes of negotiation and decision that take place between the time
at which a purchase is authorized and the time at which the order is issued. About
the only routine procedure in the process as part of a purchasing system is the
invitation to suppliers to bid and the evaluation of bids received. In MRF, when such
invitations are issued prior to ordering, the form used is generally called a request
for quotation, and no obligation to buy from the supplier quoting the lowest price is
implied.
The purchase order is the instrument by which goods are procured to fill a
requirement. It expresses in specific language the agreement between the buyer and
the vendor. Once accepted, it has the legal force of a binding contract.

The essential information in MRF purchase order includes name and address of
purchasing company, identifying order number, date, name and address of vendor,
general instructions(marking of shipments, number of invoices required, and so
forth), delivery date required, shipping instructions, description of materials ordered
and the quantity, price and discounts, and signature. Terms and conditions are
printed on the back of the form. The purchase order must bear some authorized
signature-usually that of a purchase manager or buyer.
Many companies try to get written acceptance of the order from the vendor. This is
sometimes in the form of an extra copy of the order, known as the acknowledgement
copy.
Simple purchase order systems usually require at least three copies of order.
a. the original, sent to the vendor
b. the acknowledgement copy just mentioned
c. and a purchasing department file copy.
But in MRF they maintain only two copies of purchase order, the original copy goes
to the vendor, and a duplicate copy of that will be filed for the department purpose.
3. CLEARING THE ORDER
Usually, however, the purchasing department is involved in all of these duties, on
the general principle that procurement responsibility ends only when a satisfactory
delivery has been made and materials are actually on hand for use, and when the
buyer’s obligation to the vendor has likewise been satisfied, completing the contract.
4. ROUTINE FOLLOW-UP
Follow-up is selective. The mechanism for follow-up is a file of open orders
arranged in numerical sequence so that those that are longest outstanding are in the
front of the file, giving quick visual indication of the oldest ones. This, of course, is
not an accurate indicator of the delivery dates requested or promised. Some further
coding or signaling device is necessary.

5. CHANGE ORDERS
It sometimes becomes necessary to make changes in the original order- changes in
quantity, scheduling, or specifications; changes authorizing some alternative
product; or any other of the scores of possible correction that may arise with
changing design and changing conditions of business. Many companies accomplish
changes by correspondence. MRF makes use of a form known as the change order
or change notice.
6. RECEIVING
The receiving department is usually an adjunct of the stores department, which may
or may not be a part of the purchasing department. Its functions are to receive
incoming goods, signing the delivery notice presented by the carrier or the supplier
in connection with the shipment; to identify and record all incoming materials; to
report their receipt to the purchasing department and to the stores, using, or
inspection departments as required; and to make prompt disposition of the goods to
the appropriate department.

SUPPLIER MANAGEMENT
MAKE OR BUY DECISION
DEFINITION
Determination of whether it is more advantageous to make a particular item in-
house, or to buy it from a supplier. The choice involves both qualitative (such as
quality control) and quantitative (such as the relative cost) factors.
MEANING
The make-or-buy decision is the act of making a strategic choice between producing
an item internally (in-house) or buying it externally (from an outside supplier). The
buy side of the decision also is referred to as outsourcing. Make-or-buy decisions
usually arise when a firm that has developed a product or part—or significantly
modified a product or part—is having trouble with current suppliers, or has
diminishing capacity or changing demand.
Make-or-buy analysis is conducted at the strategic and operational level. Obviously,
the strategic level is the more long-range of the two. Variables considered at the
strategic level include analysis of the future, as well as the current environment.
Issues like government regulation, competing firms, and market trends all have a
strategic impact on the make-or-buy decision. Of course, firms should make items
that reinforce or are in-line with their core competencies. These are areas in which
the firm is strongest and which give the firm a competitive advantage.
The increased existence of firms that utilize the concept of lean manufacturing has
prompted an increase in outsourcing. Manufacturers are tending to purchase
subassemblies rather than piece parts, and are outsourcing activities ranging from
logistics to administrative services.
Considerations that favor making a part in-house:
• Cost considerations (less expensive to make the part)
• Desire to integrate plant operations
• Productive use of excess plant capacity to help absorb fixed overhead (using
existing idle capacity)

• Need to exert direct control over production and/or quality
• Better quality control
• Design secrecy is required to protect proprietary technology
• Unreliable suppliers
• No competent suppliers
• Desire to maintain a stable workforce (in periods of declining sales)
• Quantity too small to interest a supplier
• Control of lead time, transportation, and warehousing costs
• Greater assurance of continual supply
• Provision of a second source
• Political, social or environmental reasons (union pressure)
Factors that may influence firms to buy a part externally include:
• Lack of expertise
• Suppliers' research and specialized know-how exceeds that of the buyer
• cost considerations (less expensive to buy the item)
• Small-volume requirements
• Limited production facilities or insufficient capacity
• Desire to maintain a multiple-source policy
• Indirect managerial control considerations
• Procurement and inventory considerations
• Brand preference
The two most important factors to consider in a make-or-buy decision are cost and
the availability of production capacity. Cost considerations should include all
relevant costs and be long-term in nature. Obviously, the buying firm will compare
production and purchase costs. Elements of the "make" analysis include:
• Incremental inventory-carrying costs
• Direct labor costs

• Incremental factory overhead costs
• Delivered purchased material costs
• Incremental managerial costs
• Any follow-on costs stemming from quality and related problems
• Incremental purchasing costs
• Incremental capital costs
Cost considerations for the "buy" analysis include:
• Purchase price of the part
• Transportation costs
• Receiving and inspection costs
• Incremental purchasing costs
• Any follow-on costs related to quality or service
CONSIDERATION IN SUPPLIERS SELECTION
PROFESSIONALISM
What constitutes 'Professionalism' depends on the business environment and may
need to be judged by other people in the same field ('fellow professionals'/domain
experts).
FLEXIBILITY & COMMITMENT
How well will they handle schedule upsets, changes to requirements etc? This may
be best judged
in informal discussion and by checks with reference clients.
OPEN/FRIENDLY
•How honest are they about problems faced & overcome?
•Are they suitably discrete about their other clients?
•Do you feel comfortable with them?
•Do they appear to communicate openly and freely internally?
INTEGRITY

•Do they stand by their offerings?
•Are they consistent in what they say:: -
- during trade-off negotiations? (e.g. if budgets are limited)
- about their capabilities?
•Are they happy to be technically/financially audited if necessary?
UNDERSTANDING YOUR BUSINESS GOALS
•Does the supplier really understand why you want to do this project, from a
Business
perspective?
PROACTIVE
•Do they offer sensible & appropriate advice on potential solutions?
UNDERSTANDS BUSINESS ENVIRONMENT
•Are they willing to work with other 3rd Party development environments and
yours?
•Where relevant, the supplier should understand multilingual requirements for
content
delivery and its impact on maintenance complexity.
SUPPLIER EVALUATION
Supplier evaluation is a term used in business and refers to the process of evaluating
and approving potential suppliers by factual and measurable assessment. The
purpose of supplier evaluation is to ensure a portfolio of best in class suppliers is
available for use. Supplier evaluation is also a process applied to current suppliers in
order to measure and monitor their performance for the purposes of reducing costs,
mitigating risk and driving continuous improvement
PROCESS
Supplier evaluation is a continual process within purchasing department and forms
part of the pre-qualification step within the purchasing process, although in many
organizations it includes the participation and input of other departments and
stakeholders.. It often takes the form of either a questionnaire or interview,

sometimes even a site visit, and includes appraisals of various aspects of the
supplier's business including capacity, financials, quality assurance, organizational
structure and processes and performance. Based on the information obtained via the
evaluation, a supplier is scored and either approved or not approved as one from
whom to procure materials or services. In many organizations, there is an approved
supplier list (ASL) to which a qualified supplier is then added. If rejected the
supplier is generally not made available to the assessing company's procurement
team. Once approved, a supplier may be reevaluated on a periodic, often annual,
basis. The ongoing process is defined as supplier performance management.
BENEFITS AND DRAWBACKS
There are various benefits associated with an effective supplier evaluation process
such as mitigation against poor supplier performance or performance failures. The
benefits typically include sourcing from suppliers that provide high standards of
product and service levels whilst offering sufficient capacity and business stability.
Supplier evaluation can help customers and suppliers identify and remove hidden
cost drivers in the supply chain. The process of evaluating performance can
motivate suppliers to improve their performance.
Associated challenges with supplier evaluation include resource and cost
commitments in establishing and maintaining a robust and effective system,
challenges with specifying and gathering meaningful and relevant information, data
integrity, scorecards that do not get at the root causes of supplier problems, and
subjective or inconsistent scoring which may result in inaccurate
assessment..Another challenge is making sure that evaluation of current suppliers
goes beyond measurement to actual performance improvement by providing
feedback to suppliers on their performance and working on continuous improvement
opportunities. Thus, management commitment to and support of a supplier
evaluation process is essential.

Analysis and Graphs:
1. Since when you are supplying materials for MRF?
Table 1
Frequency Percent Valid Percent Cumulative
Percent
0 to 6 months 7 14.0 14.0 14.0
6 months to 1
year
13 26.0 26.0 40.0
1 year to 2 year 12 24.0 24.0 64.0
More than 2 year 18 36.0 36.0 100.0
Total 50 100.0 100.0
Figure 1
Since when you are supplying materials for MRF?
Since when you are supplying materials for MRF?
More than 2 year
1 year to 2 year
6 months to 1 year
0 to 6 months
Frequency
20
10
0
18
12
13
7
INTERPRETATION
The data provided in Table 1 and Figure 1 indicates that 36% of the suppliers are
supplying materials for MRF more than 2 years, 26% of suppliers are supplying
materials from 6 months to 1 year, 24% of the suppliers are supplying materials
from 1year to 2 year and only a minimum of 14% of the suppliers are supplying

materials from 0 to 6 months. A greater percentage of the suppliers of MRF are
supplying materials for MRF from more than 2 years.
2. By what means was the order placed to you?
Table 2
Frequency Percent Valid Percent Cumulative Percent
Personally by the
purchase manager
21 42.0 42.0 42.0
By an Agent 15 30.0 30.0 72.0
Internet 14 28.0 28.0 100.0
Total 50 100.0 100.0
Figure 2
By what means was the order placed to you?
By what means was the order placed to you?
InternetBy an AgentPersonally by the pu
Frequency
30
20
10
0
14
15
21
INTERPRETATION
The data provided in Table 2 and Figure 2 indicates that 42% of the suppliers get
orders personally by the purchase manager, 30% of the suppliers get the orders by
an agent, and 28% of the suppliers get the orders through the internet. A greater

percentage of the suppliers get the orders personally by the purchase manager of
MRF.
3. Was proper follow up was done after the order was placed?
Table 3
Yes 26 52.0 52.0 52.0
No 24 48.0 48.0 100.0
Total 50 100.0 100.0
Figure 3
Was proper follow up done after the order was placed?
Was proper follow up done after the order was placed?
NoYes
Frequency
30
20
10
0
24
26
INTERPRETATION
The data provided in Table 3 and Figure 3 indicates that 52% of the suppliers agrees
that proper follow up will be done after the order is placed and 48% of the suppliers

disagrees for the same statement. The greater percentage of suppliers agrees to the
statement that proper follow up will be done after the order is placed.
4. Was your order collected on the agreed date and time?
Table 4
Yes 22 44.0 44.0 44.0
No 28 56.0 56.0 100.0
Total 50 100.0 100.0
Figure 4
Was your order collected on the agreed date and time?
Was your order collected on the agreed date and time?
NoYes
Frequency
30
20
10
0
28
22
INTERPRETATION
The data presented in figure 4 and table 4 indicates that 56 % of the suppliers say
that the order was not collected on the agreed date and time and 44% of suppliers

say that the order was collected on the agreed date and time. A greater percentage of
the suppliers disagrees to the statement that the orders are not collected on the
agreed date and time.

5. If No, what was the period of delay?
Table 5
2-4hrs 2 7.1 7.1 7.1
4-8hrs 9 32.1 32.1 39.3
8-12hrs 8 28.6 28.6 67.9
More than 12hrs 9 32.1 32.1 100.0
Total 28 100.0 100.0
Figure 5
If no, what was the period of delay?
If no, what was the period of delay?
More than 12hrs8-12hrs4-8hrs2-4hrs
Frequency
10
8
6
4
2
0
9
8
9
2
INTERPRETATION
The data presented in figure 5 and table 5 indicates that 32.1% of the suppliers say
that there will be a delay of 4-8 hours in collecting the ordered materials, 32.1% of
the suppliers say that there will be a delay of more than 12 hours, 28.6% say that
there will be delay of 8-12 hours and 7.1% say that there will be delay of 2-4 hours.
A greater percentage of the suppliers say that there will be a delay of 4-8 hours and
more than 12 hours in collecting the ordered materials on the agreed date and time.

6. Was the order delivered by you on the agreed date and time?
Table 6
Yes 33 66.0 66.0 66.0
No 17 34.0 34.0 100.0
Total 50 100.0 100.0
Figure 6
Was the order delivered by you on the agreed date and time?
Was the order delivered by you on the agreed date and time?
NoYes
Frequency
40
30
20
10
0
17
33
INTERPRETATION
The data presented in figure 6 and table 6 indicates that 66 % of the suppliers agree
that the order will be delivered by them on the agreed date and time and 34% of
disagree that the order will be delivered by them on the agreed date and time. A
greater percentage of suppliers say that there will not be any delay in delivering the
order on the agreed date and time.

Table 7
2-4hrs 7 43.8 43.8 43.8
4-8hrs 3 18.8 18.8 62.5
8-12hrs 5 31.3 31.3 93.8
More than 12 hrs 1 6.3 6.3 100.0
Total 16 100.0 100.0
Figure 7
If No, what was the period of delay?
If No, what was the period of delay?
More than 12 hrs8-12hrs4-8hrs2-4hrs
Frequency
8
6
4
2
0
1
5
3
7
INTERPRETATION
The data presented in figure 7 and table 7 indicates that 43.8% of the suppliers say
that there will be a delay of 2-4 hours in delivering the materials on agreed date and
time, 31.3% of suppliers say that there will be a delay of 8-12 hours, 18.8% of the
suppliers say that there will be a delay of 4-8 hours and 6.3% of the suppliers say
that there will be a delay of more than 12 hours. A greater percentage of suppliers
say that there will be a delay of 2-4 hours in delivering the order on agreed date and
time.

8. What do you prefer the most at MRF Ltd.?
Table 8
Product quality 15 30.0 30.0 30.0
Price 17 34.0 34.0 64.0
Convenience 8 16.0 16.0 80.0
After Sales Service 10 20.0 20.0 100.0
Total 50 100.0 100.0
Figure 8
What do they prefer most at MRF Ltd.?
What do they prefer most at MRF Ltd.?
After Sales Service
Convenience
Price
Product quality
Frequency
20
10
0
10
8
17
15
INTERPRETATION
The data presented in figure 8 and table 8 indicates that 34% of the suppliers say
that MRF give more preference to the price of the materials, 30% suppliers say that
they prefer product quality at MRF, 20% suppliers say that they prefer after sales
services at MRF and 16% suppliers say that they prefer convenience at MRF. A
greater percentage of suppliers say that MRF gives more preference to the price of
the materials.

9. How would you describe the creditworthiness of MRF Ltd.?
Table 9
Very Good 12 24.0 24.0 24.0
Good 12 24.0 24.0 48.0
Average 10 20.0 20.0 68.0
Poor 12 24.0 24.0 92.0
Very Poor 4 8.0 8.0 100.0
Total 50 100.0 100.0
Figure 9
How would you describe the creditworthiness of MRF Ltd.?
How would you describe the creditworthiness of MRF Ltd.?
Very PoorPoorAverageGoodVery Good
Frequency
14
12
10
8
6
4
2
0
4
12
10
1212
INTERPRETATION
The data presented in figure 9 and table 9 indicates that 24% of the suppliers
describe that the creditworthiness of MRF is very good, 24% of the suppliers
describe that its good, 24% of suppliers describe that its poor, 20% of the suppliers
describe that its average and 8% of suppliers describe that the creditworthiness of
MRF is very poor.

10. What is the period of credit allowed by you to MRF Ltd.?
Table 10
0-15 days 21 42.0 42.0 42.0
15-30 days 7 14.0 14.0 56.0
30-45days 18 36.0 36.0 92.0
45-60days 4 8.0 8.0 100.0
Total 50 100.0 100.0
Figure 10
What is the period of credit allowed by you to MRF Ltd.?
What is the period of credit allowed by you to MRF Ltd.?
45-60days30-45days15-30 days0-15 days
Frequency
30
20
10
0
4
18
7
21
INTERPRETATION
The data presented in figure 10 and table 10 indicates that 42 % of the suppliers are
allowing a credit period of 0-15 days to MRF, 36% of suppliers get 30-45 days, 14%
suppliers get 15-30 days and 8% of suppliers get 45-60 days. A greater percentage
of suppliers are allowing a credit period of 0 to 15 days to MRF.

11. Immediate payment is done after the delivery of materials?
Table 11
Strongly agree 11 22.0 22.0 22.0
Agree 12 24.0 24.0 46.0
Neither agree nor
disagree
10 20.0 20.0 66.0
Disagree 12 24.0 24.0 90.0
Strongly disagree 5 10.0 10.0 100.0
Total 50 100.0 100.0
Figure 11
Immediate payment is done after the delivery of materials?
Immediate payment is done after the delivery of materials?
Strongly disagree
Disagree
Neither agree nor di
Agree
Strongly agree
Frequency
14
12
10
8
6
4
2
0
5
12
10
12
11
INTERPRETATION
The data presented in figure 11 and table 11 indicates that 24 % of the suppliers
agree to the statement that immediate payment is done after the delivery of the
materials, 24% of suppliers disagree for the statement, 11% of the suppliers strongly
agree to this statement, 20% of the suppliers are in neither agree nor disagree state
and 10% of the suppliers strongly disagree to this statement.

FINDINGS
1. 36% of the suppliers supply materials for MRF from more than 2 years,
Therefore the management needs to retain these suppliers who are in
business with the company.
2. 42% of the suppliers get the orders personally by the purchase manager.
Therefore the management needs to concentrate more on placing the orders
personally by the purchase manager.
3. 52% of the suppliers agree that proper follow up is done after the order is
been placed. Therefore the management needs to concentrate more on the
follow ups to be done.
4. 56% of the suppliers are unhappy with the statement that order was collected
on agreed date and time. 32.1% of the suppliers who say no to this statement
have stated that there was a delay of 4-8hrs or more than 12hrs.
5. 66% of the suppliers are delivering the goods on agreed date and time. And
in the remaining suppliers 42.8% have made a delay of 2-4hrs in delivering
the material on agreed date and time.
6. 34% of the suppliers say that they prefer price of the material more at MRF.
The management is giving much of importance to the price of the raw
materials while purchasing.
7. 24% of the suppliers agrees that the creditworthiness of MRF is either very
good or good and at the same time equal amount of the suppliers disagree to
this statement and say the creditworthiness of MRF is poor.
8. 42% of the suppliers are giving a credit period of 0-15 days to MRF, where
as 36% of the suppliers are giving 30-45 days of credit period to MRF.
9. 24% of the suppliers are happy with the statement that immediate payment is
done after the delivery of materials and at the same time equal amount of the
suppliers are unhappy with this statement.

SUGGESTIONS
1. ON TIME DELIVERY
The company needs to concentrate more on collection of raw materials on
the agreed date and time so as to minimize the time that is wasted by the
loaded trucks which wait outside the company premises.
2. FOLLOW UP
Meanwhile the purchase department should give appropriate follow up to its
suppliers, in order to avoid late delivery.
3. QUALITY PREFERENCE
The study reveals, that the company gives more preference to the price
aspect of the materials supplied at MRF. Further, the company should give
more preference to the quality of the product in order to increase the
efficiency of the
finished product.
4. HEALTHY RELATIONSHIP
The company should maintain a healthy relationship with the suppliers by
interacting more with them, getting the feedback from them which will help
to increase the credit period allowed to MRF by the vendors.
5. FEEDBACK
Last but not the least, every process is incomplete without the feedback. The
company should maintain a feedback board or feedback forms for suppliers
to know their level of satisfaction about the purchase process.

CONCLUSION
1. The suppliers of MRF have an optimistic attitude towards their business with
the company but a few critical areas like delays in the collection of materials
and payment done for the materials.
2. Suppliers are well-bonded with MRF and are sustainable and the company
also maintains healthy relations with the suppliers and retains them.
3. MRF ensures that they maintain personal relations with the suppliers and
place the order personally instead of any third party agents.
4. Strong commitment of employees, positive attitude, loyalty, satisfaction
level of the employees towards their job would take up MRF to No.1
position.
5. Workforce is MRF’s greatest strength which will lead the company to the
apex level of the Tyre Pyramid.

BIBLIOGRAPHY
Company Manuals & Journals
Purchasing Principles & Applications by Stuart F. Heinritz, Paul V.
Farrell
WEBSITES
www.mrf.com
www.mrftyres.com

MRF LTD.
Evaluation of Purchasing Process
Questionnaire
I Mr. HARI KUMAR K, student of T JOHN INSTITUTE OF MANAGEMENT
AND SCIENCE, BANGALORE conducting this research survey as a part of the
Project undertaken at MRF Ltd. And will be kept confidential and used for
educational purpose only.
NAME OF THE SUPPLIER/VENDOR:
________________________________________________
MATERIAL SUPPLIED:
_________________________________________________
1. Since when you are supplying materials for MRF?
a. 0 to 6 months b. 6 months to 1 year
c. 1 year to 2 year d. More than 2 years.
2. By what means was the order placed?
a. Personally by the purchase manager
b. By an agent
c. Internet
3. Was proper follow up was done after the order was placed?
a. Yes b. No
4. Was your order collected on the agreed date and time?
a. Yes b. No
a. 2-4 hrs b. 4-8 hrs
c. 8-12 hrs d. more than 12 hrs
6. Was the order delivered by you on the agreed date and time?
a. Yes b. No
a. 2-4 hrs b. 4-8 hrs
c. 8-12 hrs d. More than 12 hrs

8. What do they prefer most at MRF Ltd.?
a. Product quality
b. Price
c. Convenience
d. After Sales Service
9. How would you describe the creditworthiness of MRF Ltd.
a. Very Good
b. Good
c. Average
d. Poor
e. Very Poor
10. What is the period of credit allowed by you to MRF Ltd.
a. 0- 15 days b. 15 days- 30 days
c. 30 days-45 days d. 45 days- 60 days
11. Immediate payment is done after the delivery of materials.
a. Strongly agree
b. Agree
c. Neither agrees nor disagrees
d. Disagree
e. Strongly Disagree

Evaluation of purchasing process

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